State law obstacle to Chico waste franchise agreements

Chico >> Eight months and $50,000 into a study into waste franchising options, city officials were stunned Tuesday to hear state law requires five-year notice of intent to change hauling services regardless of permit expiration dates.

After hearing the news, committee members Mark Sorensen and Randall Stone voted 2-0 to issue notice of intent to Recology and Waste Management, saying they were left with few other options. The hope is the city can negotiate exclusive franchise agreements for a "zoned system" with the haulers in lieu of the noticing and avoid the extended service terms.

The city currently has a five-year permit system limited to the two primary haulers. The companies have argued and the city's legal counsel agrees that because they city has never issued five-year notice, they have the right under state law to continue providing service beyond the term of their permits, carrying them at least into 2019 if no agreements are reached.

"It's an interesting catch-22," said Richard Tagore-Erwin, with R3 Consulting Group. "That kind of changes the options the city has in front of it."

Stone was visibly frustrated by the news, pointing out the city spent a lot of consultant money only to get tripped up over something "as easy as state law."

"It's just the nature of the beast," he said. "It's why we don't get into contracts where we have to give notice beyond the contract period."

In a similar approach, the Chico City Council recently voted to issue notice to the International Association of Firefighters employee bargaining group to give the city freedom to investigate alternative fire protection options.

Tagore-Erwin has met with Recology and Waste Management, and said they have been cooperative and honest in discussions about the future of waste hauling in the city. The haulers are partial to dividing the residential system in half and to retaining an open commercial market for which rates and services are both regulated by the city.

The preferred option presented to and supported by the committee is to negotiate an exclusive franchise limited to Waste Management and Recology based on exclusive service zones. The haulers would be responsible for providing street sweeping, leaf collection, collection from city buildings and facilities, and illegal dumping collection.

The city would set maximum rates for all services. Franchise agreements, which would replace existing permits and waive continuity rights, would cover both residential and commercial services and all related terms.

"It's similar to what you have now except the city would have a lot more control," Tagore-Erwin said. "You would have fundamentally everything you want from a service delivery standpoint and rate control."

The city has been discussing waste franchises for years but moved forward with the idea in August upon hiring R3 at a cost of $14,500 to determine options, potential costs and impacts to residents. In December, a split City Council voted to increase the allocation up to $99,200, depending on scope of service. So far, the city has expended $50,153.20.

The city had hoped to have franchise agreements in place by June 30, 2016, when the current permits expire. If it can negotiate franchise agreements that waive the five-year notice, the goal is for the changeover to take effect Jan. 1.

A lot of discussion remains related to rates, a point of concern for customers. Rates differ widely throughout the state as every municipality appears to have different services, from container sizes to additional services to frequency of pickup, Tagore-Erwin said.

Michael Gross with GreenWaste Recovery said the waste hauling contracts have never really gone out to bid and should because other haulers exist beyond Recology and Waste Management.

Sorensen said the idea of going out to bid is a good one but doesn't make sense at this time.